RBI’s gold reserves rise by 27% in 2 years; buys record gold this year

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The gold reserves of Reserve Bank of India (RBI), India’s central bank stood at 705.6 tonnes as on June 30. The gold reserves were at 558.1 tonnes in the beginning of 2018

The Reserve Bank of India (RBI) has increased its gold purchases, as part of its foreign exchange (forex) reserves. In the first half (H1) of calendar year 2021 (CY21), the addition of gold to India’s forex reserves has been the highest — on a half-yearly basis —at 29 tonnes. Now, the RBI’s gold holding — as a proportion of its forex reserves — has for the first time crossed 700 tonnes.

The RBI has been buying gold in a big way to diversify forex assets. The Reserve Bank of India was the second-largest buyer of gold among central banks after Turkey in FY21, according to a World Gold Council Report.

The Reserve Bank of India bought 42 tonnes (1.36 million troy ounces) of gold in the last fiscal year amid uncertainty on US treasury yields. The central bank ended FY21 with a valuation loss of its foreign exchange reserves as US treasury yields, where the bulk of the reserves are parked, have hardened in recent times.

In FY 21, India added 42.3 tonnes gold to its reserves  Gold’s share in the total foreign exchange  reserves decreased from about 6.69 per cent as at end-September to about 5.87 per cent as at end-March 2021.

India’s gold reserves went up by 42.3 tonnes in the one-year period ended March 31, 2021, against 40.45 tonnes in the year-ago period. As at end-March 2021, the Reserve Bank held 695.31 tonnes of gold as part of its foreign exchange reserves management against 653.01 tonnes as at March-end 2020, as per the central bank’s “Half Yearly Report on Management of Foreign Exchange (Fx) Reserves.”

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